SA's fixed-line utility Telkom, a 50% shareholder in SA's largest mobile provider Vodacom, is looking to start its own mobile operations, potentially becoming SA's fourth mobile network operator.
According to a number of ICT industry sources, the fixed-line operator has applied for spectrum in the 1 800MHz band from the Independent Communications Authority of SA (ICASA).
Additionally, high-level Telkom executives, including COO Motlatsi Nzeku and group executive for national infrastructure provisioning Marius Mostert, attended the Mobile World Congress, in Barcelona, Spain, last week, where they met with a number of current and potential vendors.
Telkom refused to comment on the matter, and would only reiterate it is conducting a review of its mobile strategy.
"This review is not complete and Telkom will provide more information to the market when we are ready to do so," says Nabintu Petsana, acting group executive for corporate communications.
ICASA also refused to comment on the matter.
Under the Electronic Communications Act, Telkom is allowed to provide fixed-line, mobile and broadcasting services.
Hedging bets
Analysts are divided on whether Telkom's application can be viewed as commitment to a split with Vodacom, which has - to date - proven to be a lucrative revenue-spinner for Telkom.
Corrie Froehlich, head of Frost & Sullivan's African ICT team, says Telkom has made it clear it wants to disinvest from Vodacom. Vodacom's recent initiatives, such as its roll-out of fixed-line infrastructure, also show it is going to compete with Telkom head-on, he says.
Telkom's shareholding in Vodacom must be used to obtain a mobile strategy, as it is the future, he says.
On the other hand, BMI-TechKnowledge senior analyst Richard Hurst sees Telkom's application for mobile spectrum as hedging its bets.
"I don't think that we can interpret this as a strong indication that Telkom has committed itself to the split with Vodacom," he says.
Dwindling opportunity
Hurst also cautions that Telkom's move can be viewed as a consequence of convergence, rather than the possibility of creating a fourth mobile network to compete with Vodacom, MTN and Cell C.
It is not yet clear whether Telkom would launch a mobile division, or create an independent company, as it has done with its broadcasting arm Telkom Media.
"I don't see it as starting from scratch. We are unlikely to see them rolling out mobile infrastructure in the scale of Vodacom or MTN, but rather use existing infrastructure and fill-in technologies such as WiMax to develop relationships with existing and new customers," he says.
Froehlich adds that the vehicle or structure Telkom forms to house its mobile operations would need to be considered carefully. It must not duplicate existing areas of the business, but rather create effective synergies, he says.
While starting from scratch is never easy, it avoids the problem of too many cooks spoiling the brew, says Froehlich.
"One of the challenges for Telkom in SA would be to acquire enough skilled personnel to execute a new mobile strategy quickly. I believe many options are still available to Telkom, but it's more a matter of the opportunity window getting forever smaller," he says.
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